Cardano (ADA) Retests a Multi-Month Support at Around $1

Cardano (ADA) Retests a Multi-Month Support at Around $1

Cardano has not been spared the whims of moody bears reading from the development in the daily chart. Losses of the past three months have been profound, and bulls, as optimistic as they are, didn’t unwind losses.

At present, sellers have the upper hand, and the short-term seems to be dark reading from the formation of the ADA/USDT price action.

Technically, prices are inside a tight trading range with an identifiable range between $1 and $1.20 to the upside. Although the sideways accumulation may suggest strength, the short-term trend will be defined once there is a close above $1.20 or $1 in subsequent sessions.

DeFi in Cardano

Fundamentally, Cardano is supported. The launch of smart contracting following the activation of Alonzo, marking the end of the Goguen phase, is already drawing users to the network. From the Cardano’s DeFi ecosystem, the first DEX launched in late January 2022. More protocols will activate in H1 2022 as DeFi in the Proof-of-Stake network takes shape.

DeFi could likely propel ADA demand as we advance, lifting the coin from spot rates. By early February 2022, the total value locked in Cardano stood at $73 million, a near 20X jump from mid-January, where it was at a mere $3 million.

In combination with scaling enhancement following the inconveniencing congestion in the last few days of January, the block size increment in early February could see the throughput increase, leading to faster transaction confirmation and a better user experience.

Cardano Price Analysis

Cardano Price Analysis

ADA is down 66 percent from H2 2021 highs as bears press lower. As from the ADAUSDT price formation in the daily chart, bears are in the driving seat. Following the bear engulfing bar of February 2, the inability of bulls to counter rampant sellers could see further losses in the short term.

Notably, at spot rates, ADA prices are at a crucial juncture, retesting a multi-month support level at around $1. A close below the $0.97 to $1 immediate support may see ADA tumble to $0.70—or worse in the medium term.

Therefore, for the uptrend of H2 2021 to resume, bulls must reverse February 2 losses and close above $1.20 with increasing trading volumes. In that case, ADA prices may rise to $1.50-or better in the sessions ahead.

Technical charts courtesy of Trading View

Disclaimer: Opinions expressed are not investment advice. Do your research.

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